Stimulated by the news that it plans to open 10,000 "Gome Supermarkets" in three years, Gome Retail (00493.HK) rose 2.5% HKD on Friday (17th), with a single-day increase of 80.65%. Gome Retail clarified in an announcement that night that the company is not a contractor of the proposed supermarket business, and that the supermarket business will be operated by the company's main shareholder Huang Guangyu and its related parties in cooperation with an independent third party. However, for the market, Huang Guangyu is deeply bound to the word "Gome", and whether the new project "Gome Supermarket" can succeed will have a major impact on both.
Blue Whale reporters have recently received reports from many consumers that home appliances previously purchased from Gome Electric Appliances have not yet been shipped, and the money paid has not been refunded for a long time. When a consumer goes to court to file a lawsuit, he or she is also provided with a document template that has been prepared by the court. It can be seen that the above situations are not isolated cases.
Against the background that business reputation has been severely damaged, the advancement of the new project "Gome Supermarket" obviously faces many challenges.
Huang Guangyu’s creation of “Gome Supermarket” is questioned
According to "Retail Circle", at the business launch ceremony on October 17, Gome Supermarket founder Liu Haoyi said: "We have completed the first 100 days of infrastructure construction and are about to usher in the second 100 days of critical stage, which is crucial for each of us. Our strategic goal is to open 230 stores, and my personal goal is 500. Once we exceed 500 stores, we will occupy a certain position in the snack market.
It is reported that Gome supermarkets can also join, and like franchises, they use the Gome trademark in the form of franchises of their own stores.
According to media reports, the news of “opening 10,000 stores in three years” came from Gome Supermarket’s Douyin video.
However, a netizen who claimed to be a senior supermarket expert left a message and questioned it, believing that if Gome Supermarket is expanded through franchising, "To put it bluntly, I have no money (to invest) and want to use the supermarket to make money." He pointed out that first of all, the Gome brand value is not attractive, and franchisees can choose better brands. Secondly, as far as Gome's current reputation is concerned, "Who dares to play with you and buy cash and have no money? Isn't that a bit ridiculous?" Finally, "Nowadays, snack discount stores, discount stores for last-minute goods, etc. are very mature, and the competition is very fierce. How can you compete with others?"
Late on Friday night, Gome Retail issued a clarification announcement saying: The board of directors has taken note of various news reports about Gome Supermarket’s plan to open 10,000 supermarkets within three years. The Board would like to clarify that the Company is not a contractor of the proposed supermarket business. According to the understanding of the board of directors, the proposed supermarket business will be operated by the company's major shareholder Huang Guangyu and its related parties in cooperation with an independent third party. The company does not rule out the possibility of exploring new retail project opportunities in the future. If such opportunities arise, the Company will make further announcements.
It’s difficult to get money back if it doesn’t deliver goods. Gome’s business reputation has been hit hard.
A recent investigation by Blue Whale reporters found that the analysis of the above-mentioned people is not unreasonable.
Many consumers directly reported to reporters that long-term non-delivery and difficulty in refunding are the main difficulties currently faced by some consumers of Gome Electrical Appliances. In addition, the large-scale closure of offline stores of Gome Electrical Appliances has also increased consumer uneasiness.
A consumer from Lanzhou, Gansu told Blue Whale reporters that he purchased a dishwasher and an all-in-one steamer and oven from Gome Electric in October 2022, with a total price of about 20,000 yuan, but Gome has not shipped the goods. After the epidemic is over, although Gome promised to provide refunds, it has been delaying it until now. In March this year, the Gome store where the consumer placed the order has been closed.
Source: provided by consumers
According to the consumer, he also reported it to the market supervision department, but to no avail.
Similarly, Xiao Gao, a consumer in Shanghai, purchased a high-end brand dishwasher worth nearly 10,000 yuan at a Gome offline store in October 2022, but Gome has not shipped it yet.
In the middle of this year, after more than half a year of urging, the staff who originally sold her the dishwasher also frankly told her: Now Gome is basically unable to deliver the goods. "It has been (unable to ship goods) for half a year. Now Shanghai Gome is completely closed, and only the after-sales store is in Guangxin Yongle."
When checking the delivery progress at this after-sales store, Xiao Gao discovered that the problem was not only that Gome had not shipped goods on time, but that even the dishwasher manufacturer had not yet accepted orders.
"No. 1133 Hongqiao Road." The after-sales staff who was inspecting the goods suddenly told Xiao Gao the address, "Changning District People's Court, they are handling all matters of (Gome) now, and we are waiting. Wages have not been paid yet, and (Gome) is just wasting time." The staff member said that there were rumors that if the prosecution goes smoothly, (Gome) will pay the money at the end of (2023), but no one can guarantee it.
It is obviously not the first time this staff member has met consumers like Xiao Gao. "I never thought (Gome would be like this), it's a good thing you only bought a dishwasher."
The Blue Whale reporter called the relevant dishwasher manufacturer regarding this matter. The manufacturer was obviously not surprised by the inquiries from consumers from Gome. "Now Gome's funds are abnormal, and the arrears have caused the supply of goods to be cut off. We have not received payment from Gome until now." A staff member of the home appliance manufacturer said that according to the process, it is necessary to wait for Gome to settle the payment to the manufacturer before the manufacturer can arrange delivery. However, now Gome has not paid for the goods, and there is even payment in arrears.
In July this year, Xiao Gao went to Changning District Court to submit a petition. She found that there should be many Gome consumers going through judicial procedures, and the court had prepared a stack of printed document templates for suing Gome directly at the front desk.
A reporter recently learned during a return visit that due to material reasons, Xiao Gao’s petition was resubmitted in early November. As of now, Xiao Gao has not received any official reply from Gome, and there is no sign of the repayment matter moving forward.
"Actually, I think there will be no results, and I don't expect it, but I just don't want to let it go easily." Xiao Gao told the Blue Whale reporter.
Source of the court’s “prosecution template”: provided by consumers
Closing stores due to arrears of wages has dragged down the performance of listed companies
In order to explore the situation of Gome, Blue Whale reporters recently visited some stores in Shanghai and Guangzhou.
The reporter saw in a former Gome store in Pudong, Shanghai that the site had been renovated and turned into a JD.com offline store. Currently, the vast majority of Gome stores in Shanghai are closed, and some contact numbers have been shown as empty.
Blue Whale reporters also went to the location of Guangzhou Gome Electrical Appliances Co., Ltd. in Haizhu District, Guangzhou to learn about the situation. It was discovered that the original location of Gome Electrical Appliances had been "bigly changed". The original Gome Electrical Appliances sign with white characters on a red background had been replaced by the signboard of a dental clinic. The original two-story home appliance store inside has been completely renovated and is now open for rent.
Left picture: Photo of the location of Guangzhou Gome Electrical Appliances Co., Ltd. Photo taken by Blue Whale reporter Right: Photo of map software Guangzhou Gome Electrical Appliances Co., Ltd.
According to the staff at the fixed stall nearby, starting around July this year, the signboard of Gome Electric Appliances was changed to a dental clinic. Recently, many consumers who have purchased electrical appliances and need repairs have come to him to inquire about the situation of Gome electrical appliances.
A former Gome employee in a city in South China told Blue Whale reporters that he resigned in June this year, and Gome still owes him about seven months of salary, year-end bonus, reimbursement, etc. Currently applying for labor arbitration.
Provided by interviewees
According to the former employee, many of his colleagues left the company but were owed wages. Although they are all going through labor arbitration, he feels that "the effect is not very good" because Gome "has no money in the account."
Regarding the overall situation of Gome Electrical Appliances, the former employee said that Gome owed suppliers payment, consumer refunds, advertising money, etc.
"The situation of other branches is similar. There may be one or two branches (because) they have their own properties, so they may be able to operate well."
According to him, despite being adversely affected by many parties, some Gome stores are still operating. If consumers purchase goods in Gome stores, it does not necessarily mean that the goods will not be shipped. Because most of the affected orders were previous orders, Gome later re-signed contracts with some suppliers. If consumers buy these brands that have agreed to supply, they may still be able to mention the goods.
Gome Retail issued an announcement on October 18 and disclosed that as of September 30, Gome Retail had 2 self-operated stores and 107 franchise stores in Guangdong. Compared with 14 self-operated stores and 181 franchise stores at the end of the previous quarter, the number of Gome stores in Guangdong alone decreased by 86 in one quarter.
Reporters also discovered that Gome's default in arrears with suppliers has directly affected the performance of some listed companies.
For example, Sichuan Changhong's announcement on October 25 showed that among the credit impairment losses from January to September 2023, the company and its subsidiaries made individual impairments for the receivables of the Gome system of 56.761 million yuan; among the asset impairment losses, the impairment for the contract assets of the Gome system was 1.21 million yuan. As of September 30, 2023, the company and its subsidiaries have made full provision for bad debts for the direct and indirect receivables of Gome System.
According to Tianyancha, Gome Electrical Appliances is now "ridden in lawsuits", with disputed parties including banks, home appliance companies, and individuals.
The "rescue" measures are not effective and the franchise business is indeed negatively affected
Public information shows that Gome Electric has been in troubled times since last year. During this period, founder Huang Guangyu also repeatedly hoped to revive Gome. Proposals include betting on "True Happy App", financing cooperation with Xiamen C&D Group, developing live broadcast business, opening up franchise business, etc. The majority of investors also generally have certain expectations for this, hoping that the former richest man can "turn the tide and help the building before it collapses."
However, according to the above-mentioned former employees, some of the above "rescue" measures have not been effective.
As far as the franchise business is concerned, he said “it’s really difficult.” Because if you join and open a new store, it will still be negatively affected by early consumer disputes, supplier disputes, etc. "Based on this situation, people (those interested in joining) may not invest even if they have money."
Regarding online channels, he feels that "Boss Huang spent a lot of money after he came back, doing all kinds of publicity and all kinds of traffic diversion. But when Gome App was renamed to True Happiness, the public's recognition of it is doubtful."
Public information shows that in January 2023, True Happy App has been renamed Gome.
In addition, the plan to raise funds from Xiamen C&D Group has been confirmed by industry insiders close to Gome since November last year. But there has been no follow-up to the matter. The above-mentioned former employees told reporters that in fact, Gome and Xiamen C&D did cooperate, but it was not in the form of direct capital injection. Instead, Xiamen C&D helped Gome sell goods through its own channels. However, Gome was required to deliver the goods first and pay later, that is, Jianfa sold the goods and then paid Gome, which was equivalent to "another hand."
“At that time, a special system for construction, development and sales was built, but I don’t know if it still exists now,” said the former employee.
The weakening fundamentals also continue to be reflected in the capital market. The stock price of listed company Gome Retail has plummeted.
After changing accounting firms several times, Gome Retail finally disclosed its 2022 annual report on July 14. During the reporting period, the company's total operating income dropped by 61.81%, and its net profit loss reached a record high of 19.956 billion yuan.
In the first half of 2023, Gome's retail sales revenue plummeted by 95.74%, and the loss attributable to the owners of the parent company was 3.539 billion yuan, with the loss scale expanding by 19.32% year-on-year.
What is even more noteworthy is that the 2022 annual report released by the new auditor Kaiyuan Xinde Accounting Firm is a non-standard audit report (no opinion can be expressed).
Kaiyuan Xinde said that Gome Retail’s continued operations face “many uncertainties.” Including current liabilities exceeding its current assets by RMB 29.2 billion; certain loans payable to financial institutions are overdue; several banks have taken legal action over overdue balances; the company is involved in pending civil claims or lawsuits filed by multiple civil litigants; due to the suspension of supply by several major suppliers, revenue has been significantly reduced after the end of the reporting period, which has had a significant impact on the company's operations, etc.
Taken together, the challenges that Gome is currently facing are severe. The changes in the industry have also given some footnote to Gome's predicament.
Regarding the above situation of Gome Electrical Appliances, Blue Whale reporters sent a letter to Gome Retail for consultation, but as of press time, no reply has been received.
According to the "2021 China Home Appliances Market Report" released by the China Electronic Information Industry Development Research Institute, online channel retail sales accounted for 52.9% of the overall home appliance market, accounting for more than 50% for two consecutive years. The shares of JD.com and Tmall have further increased, Suning's share is only 16.3%, and Gome has shrunk to 5.0%.
Many offline dealers of home appliances complained to reporters that online competition has a comprehensive impact on business. In addition to the loss of passenger traffic, the profit squeeze is also quite serious. An offline dealer of air conditioners told reporters that due to various factors, including online competition, the profit of an air conditioner used to be 4 to 6 hundred yuan, but now it is only 1 to 2 hundred yuan. The manufacturer's idea is to walk on two legs, online and offline, and hit the market with low-end and low-price products online.
Another dealer told reporters that in the face of this situation, their competitive strategy is to do more business with regular customers and use better and more frequent services to retain customers.
However, what is thought-provoking is that the weakening of the offline environment does not mean that its value is completely lost. During a visit to Shanghai, the reporter discovered that some of Gome’s original stores were replaced by JD.com’s physical home appliance stores.
At the end of April, at the AWE JD Home Appliances 2023 Home Appliances Industry Supply Chain Innovation Roundtable Discussion attended by Blue Whale reporters, Li Shuai, head of the JD Retail Home Appliances Division, revealed that this year, the company will accelerate its offline channel layout. "Whether it is a large store of 40,000 to 50,000 square meters like a super experience store, a city flagship store with one store in one city, or a home appliance store with an offline franchise system. Scenario-based (layout) allows users to experience new home appliance products more quickly."